Industry News: V9N1


Judge Strikes Sandy Hook Lawsuit Against Remington

“A Connecticut Superior Court judge struck decided in favor of Remington Outdoor companies, Camfour Holding, and Riverview Sales, in striking the amended case brought by some families of the Sandy Hook victims. In the decision, the judge said that the plaintiff’s allegations did not meet the narrow exception for ‘negligent entrustment’ allowed under the Protection of Lawful Commerce in Arms Act (PLCAA), nor did it meet the applicable standard under Connecticut law. The court ruled as it should in this case,” said NSSF Senior Vice President and General Counsel Larry Keane. “We are again reminded of the bulwark that the PLCAA provides the industry against unreasonable litigation od this type, even as [former] Presidental candidate Hillary Clinton has repeatedly called for its repeal.”

Urge Your Congressman to Support Export Control Reform

In July, the U.S. State Department’s Directorate of Defense Trade Controls (DDTC) changed the goal posts on us by redefining what it means to be a “manufacturer.” ATF’s definition differs considerably from what DDTC put out and, as a result, there is mass confusion. Many dealers who repair firearms and conduct a task that many hunters can do on their own, such as mounting a scope or changing the sights, are now considered manufacturing and are required to pay $2,250 and register as an exporter with the agency who controls exports, even if the dealer/gunsmith doesn’t actually export anything.

Not only is the new guidance causing a significant amount of confusion for thousands of gunsmiths across the nation, but the current export control system puts the U.S. at a competitive disadvantage in the global marketplace and puts our national security at risk.

Congressman Steve Scalise (R-La.) has introduced sensible pro-business and trade-enhancing legislation to address this issue. H.R.6176, the Export Control Reform Act of 2016, if enacted, will transfer export licensing for commercial products from State to Commerce, where it is more appropriately equipped to control the exportation of these consumer products and remove the costly and unduly burdensome registration fee. This would streamline the licensing process, provide greater flexibility for multi-year licensing, and save gunsmiths and many manufacturers of handguns and rifles $2,250 every year. Additionally, it would allow the State Department to place greater focus on those sensitive articles that would remain on the U.S. Munitions List that are inherently military in nature or provide a critical military or intelligence advantage to the U.S.

Please contact your Member of Congress immediately and respectfully urge your member to cosponsor H.R. 6176, the Export Control Reform Act of 2016. You can call 202-225-3121, or find your member of Congress online.

Philippine President Duterte Turns to Russia and China

Faced with criticism of Duterte’s violent crackdown on the local drug trade, the Obama Administration recently announced that it would discontinue weapon sales to the state. Duterte’s crackdown on drug trafficking has reportedly resulted in nearly 3,000 Filipinos dead during his first three months in office. Duterte said he would simply buy weaponry from Russia and China.

“Tomorrow, Putin and Xi Jinping will be my close friends,” Duterte said according to the Phillipine newspaper, “PhilStar.” In the same public address, Duterte said that he had complained to Russian Prime Minister Dimitri Medvedev about the U.S. in a private meeting last month. [Duterte] told him this is the situation: “They are giving me a hard time, they are disrespecting me, they are shameless.” Allegedly Prime Minister Medvedev responded by saying, “That is really how the Americans are. We will help you.”

Court Holds that the United States May Jail Anyone, Anywhere, for Dollar-Based Transactions

Controversial Turkish businessman Reza Zarrab arrived in Miami on March 19, 2016, to take his wife and daughter to Disneyland and was arrested at the airport.  His application for bail was denied, and he is still languishing in jail, despite having retained fifteen lawyers from top-flight law firms.

Zarrab is accused of violating U.S. sanctions on Iran by processing payments through his financial network for companies in Iran. His team of lawyers sought to dismiss the indictment, arguing that U.S. sanctions could not reach a foreign citizen requesting foreign banks to send money from foreign citizens to persons in Iran. In response, Judge Berman, writing for the United States District Court for the Southern District of New York, issued an opinion disagreeing with the defendant’s claim and asserting that the United States could prosecute anyone anywhere in the world engaged in any transactions involving U.S. Dollars.

Before foreign readers get too concerned, it appears that the judge misquoted the applicable law and Congressional intent in making his ruling. The International Emergency Economic Powers Act is intended to reach extraterritorial conduct. Nevertheless, the statutory language gives the President the power to regulate property in which a foreign national has an interest. The statute omits the power with respect to property “subject to the jurisdiction of the United States.”

This omission is significant because Congress granted regulatory authority to block such property but did not criminalize foreign conduct by foreign persons in transactions involving such property. In this case, Zarrab is accused of violating U.S. sanctions on Iran by processing payments through his financial network for companies in Iran.  Zarrab did not have an interest in the payments and was only performing a service on behalf of Iranian clients.

New Mechanism for Submitting Commodity Jurisdictions Launched

As part of the DDTC’s IT Modernization project, the State Department’s Directorate of Defense Trade Controls (DDTC) will require Commodity Jurisdiction (CJ) requests to be submitted online via the new Defense Export Control and Compliance System (DECCS). Companies engaged in aerospace and defense-related industries, whose activities are subject to the International Traffic in Arms Regulations (ITAR), have the option of submitting CJ requests to the DDTC for a formal and binding determination as to whether their goods, software or technical data are subject to the ITAR or to the Export Administration Regulations.

The DECCS will eventually be used not only for the submission of CJ requests, but also for DDTC annual registrations and ITAR license applications. The CJ request application will be the first module rolled out in the DECCS. Once all of the remaining modules are launched, DECCS will replace the current D-TRADE system, EFS, MARY and ELLIE.

Companies may access the DECCS using a web browser such as Internet Explorer, Google Chrome and Mozilla Firefox. Usernames and passwords will be required to log in to most of the modules in the DECCS except for the CJ request application. Digital certificates currently being used by companies for their D-TRADE submissions will also be allowed in the DECCS environment. There will be a total of fifteen (15) screens in the CJ application that companies will need to navigate through and complete. As companies are preparing their CJ requests, they will have the ability to save the applications and access them again at a later date. Once the company has submitted its CJ request into the DECCS, a pop-up message will be generated confirming that the application has been received and showing the unique CJ number assigned to the case, which should be used to track the status of the application through the ELISA system.

A CJ determination letter will be mailed in hardcopy to the company; however, the DDTC is planning to roll out an automated dissemination process for CJ determinations in the future.